OCR Text |
Show UNITED STATES TO ACT PART OF WORLyANKER Federal Board Authorizes Appointment of Bank of England as Correspondent Correspon-dent of ReserveBank. RADICAL CHANGE IN FISCAL POLICY Other Foreign Connections Will Strengthen Our Position Po-sition and Maintain Supremacy of Dollar. WASHINGTON, Deo. 25. Th government govern-ment today took its first formal step, through the federal reserve board, look-ins look-ins to the establishment of financial connections con-nections abroad through which It hopes to strengthen the position of the United States as a world banker and to maintain the American dollar as the standard of exchange, ex-change, Under a section of the federal reserve act, the board, authorized the appointment of the Bank of England as a foreign correspondent cor-respondent of the federal reserve bank of Kew York, and announced that the eleven other reserve hanks might participate In the agency relations. Connections with other foreign governmental govern-mental institutions such as the Bank of i'Yance are foreshadowed, officials say,-by totlay'H action. The Bank of England is the first foreign for-eign correspondent whose appointment has been authorized since the operation of the new financial system In this country. coun-try. Part of General Plan. Iu addition to being the first step by the government toward going after foreign for-eign business, Jt Is understood that authorization au-thorization of this apoplntment is a part of general plans for establishing financial connections that will strengthen the United States as a creditor nation In the commercial competition which probably will result when the war closes, and to provide a ready means to offset any ten-, dency on the part of foreign bankers to withdraw the huge supply of gold accu-mulated accu-mulated here during the war. The action marks a radical departure from the previous financial policy of the country, inasmuch as it places the government gov-ernment of the United States and Great Britain, for the first time, in direct, continual con-tinual financial relationship. Will Study Effect. The first effect, It Is thought, will be noticeable in transactions which might otherwise involve the exportation of gold from this country, as the connection with the Bank of England will afford a channel chan-nel through which American banks can readily purchase British notes and securities securi-ties to meet any tendency toward gold exportation. It also will tend, officials believe, be-lieve, to bring about a better feeling and understanding between the bankers of the two countries. Whether operations through the connection will be extensive, officials admit is difficult to forecast. They might be on a tremendous scale, it was said, and on the other hand, might be comparatively compara-tively light in volume. The effect of the relationship, probably will be studied carefully before similar authorizations au-thorizations are made in the case of other government-controlled banks abroad. Statement Issued. In its statement announcing the action, tho board said: Tho federal reserve board has authorized au-thorized tho federal reserve bank of New York to appoint as ono of its foreign correspondents and agents the Hank of Kngland uf London, England, under the terms of tho federal reserve 'net. Section 14 of the act permits anv federal renervo bank with the consent of the fede.nd reserve board to open and maintain banking accounts In ior-cin ior-cin countries, appoint correspondents and establish aceneies in such countries coun-tries wheresoever it may deem best fur the purpose of purchasing, sell-ins sell-ins and collecting bills of exchange and to buy and tell with or without Its endorsement through such correspond corre-spond en ts or agencies bills of exchange, ex-change, arising out of actual commer-cial commer-cial transactions, so that a broad field oi opoiations is possible under it. In grajitlng tho authority to establish estab-lish this agency the board has au-i au-i horlzed the federal reserve bank of New York to maintain accounts either for or with the Hunk of Kngland so that operations both in England and in tho United States are possible. Other federal reserve banks may pa rile I pate in the agoncv relationship relation-ship with the Bank of England upon the s.inio terms and conditions that will govern the federal reserve bank of New York, if they so desire. |